Stephen P. Joyce - Chief Executive Officer, President and Director David L. White - Chief Financial Officer, Senior Vice President and Treasurer

Shaun C. Kelley - BofA Merrill Lynch, Research Division Anthony F. Powell - Barclays Capital, Research Division Robin M. Farley - UBS Investment Bank, Research Division Nikhil Bhalla - FBR Capital Markets & Co., Research Division David Loeb - Robert W. Baird & Co. Incorporated, Research Division Steven E. Kent - Goldman Sachs Group Inc., Research Division Thomas Allen - Morgan Stanley, Research Division

Ladies and gentlemen, thank you for standing by. Good morning, and welcome to the Choice Hotels International Third Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. During the course of this conference call, certain predictive or forward-looking statements will be used to assist you in understanding the company and its results, which constitute forward-looking statements under the Safe Harbor provision of the Securities Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as Choice or its management's beliefs, expects, anticipates, foresees, forecasts, estimates or other words or phrases of similar import. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Please consult the company's Form 10-K for the year ending December 31, 2012, and other SEC filings for information about important risk factors affecting the company that you should consider. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We caution you, do not place undue reliance on forward-looking statements, which reflect our analysis only and speak only as of today's date. We undertake no obligation to publicly update our forward-looking statements to reflect subsequent events or circumstances. You can find a reconciliation of our non-GAAP financial measures referred to in our remarks as part of our third quarter 2013 earnings press release, which is posted on our website at choicehotels.com, under the Investor Information section. With that being said, I would now like to introduce Steve Joyce, President and Chief Executive Officer of Choice Hotels International Incorporated. Please go ahead, sir. Stephen P. Joyce: Thank you. Good morning. Welcome to Choice Hotels Third Quarter 2013 Earnings Conference Call. And joining me this morning, as always, is Dave White, our Chief Financial Officer. Today, we'll update you on our financial performance for the third quarter, including our core hotel franchising business, as well as the progress we're making with our key strategic growth initiatives. We are pleased to share that we had a strong quarter. The franchise system and our market share grew, RevPAR increased, development is up and we have exciting brand news. The results for this quarter exceeded our financial expectations. Several factors have contributed to our strong results this quarter as reflected in the key indicators we use to measure our lodging business. Franchising revenues have grown 6%, driven by an increase in our domestic royalties and a 43% increase in our initial and relicense fee revenues for the quarter. Domestic royalty growth for the quarter was driven by a 3% increase in RevPAR, a 2% increase in the number of domestic hotels under franchise and a 1-basis-point increase in our effective royalty rate. Growth in initial and relicensing fee revenue reflects the execution of 129 new domestic hotel franchise contracts during the third quarter compared to 89 new domestic hotel franchise contracts in the same period in the prior year. In addition, the company achieved a 16% increase in relicensing and renewal transactions. This is a very good sign for deal activity. More good news on the development front. We are pleased to announce that new domestic franchise contracts are up 45% systemwide for the quarter and up 22% year-to-date. We remain on track to outpace last year's development results as our brands continue to be attractive to franchisees. Our strong development results for the quarter were led by conversion Franchise Sales. Conversions increased 54% for the quarter. We executed 109 domestic conversion contracts compared to 71 during the same period last year. This result approaches the highest number of conversions executed in the third quarter, nearing our peak in the third quarter of 2006 when we executed 102 -- 122 conversion Franchise Sales. Year-to-date, domestic conversions are up 27% systemwide. There are a number of other areas on the development and brand front that we are pleased with. Let's talk a little bit about Comfort. We are particularly excited about the development results for our iconic Comfort Inn and Comfort Suites brands. This quarter, development for Comfort Inn is up 167%, and our Comfort Suites brand has increased development by 50% this quarter. Franchisees are telling us they are excited about the multi-year plan now underway at Comfort Inn, which we have designed to position the brand as a leader in the upper mid-scale segment among both guests and franchisees. The plan includes new hotels featuring the Truly Yours design package, brand-wide programs, including new bedding and a consistent welcome experience, renovations for some existing hotels and strict criteria that require some hotels to improve or be removed from the system as we have been doing for the last few years. The program called Comfort Re-imagined is designed to propel the brand to the top of its category. In May, Choice launched a landmark $40 million Comfort property improvement incentive program to build on the success of the brand's refresh. We expect that over the next 2 years, this incentive will enable the turbocharging improvements at our hotels to create a better guest experience and a better overall impression of the Comfort brand. The incentive program has been exceptionally well received with an extremely strong level of interest from franchisees. The incentive also demonstrates to new franchisees how committed Choice is to the long-term success of this brand. Talk a little bit about Ascend. The Ascend Hotel Collection, our fast-growing portfolio of independent hotels, continues to excel. Ascend continues to play an integral part in our corporate strategy to expand into the upscale segment. Ascend also enables us to leverage the strong demand of our brands in urban markets worldwide. Ascend now has 116 hotels located around the world in North America, Europe, the Caribbean, Australia and Central America. This is a remarkable growth for portfolio launched in late 2008. Through the end of the third quarter 2013, we have opened 45 hotels compared to 9 for the same time last year. Many of these hotels are in top business and leisure destinations, such as Napa Valley, Miami, Orlando, Cape Cod, New Orleans and some amazing international locations as well. This quarter, we are particularly excited about Ascend's international expansion, having just added its first hotel in Ireland and another in Australia. The gibson hotel is located in Dublin's cultural hub close to both the airport and the city center. Our new Ascend in Australia, the Castlereagh Boutique Hotel, is a restored historic property that is located in Sydney in the heart of the central business district. This quarter, one of our newest Ascend deals in the U.S. has been the signing of the 150-room hotel Blake located in downtown Chicago. The hotel is in the 19th century Morton and Duplicator building in the heart of historic Printers Row in the South Loop. We continue to be excited that so many independent hotels recognized the benefits of affiliating with Choice. Cambria Suites has accelerated its growth plan with a wave of hotel openings and groundbreakings. Last month, we hosted a groundbreaking for the new Cambria Suites in the master-planned community of Desert Ridge in Phoenix. At the groundbreaking, we launched the brand's new catering program designed to attract group business and meet the needs of guests using the hotel's meeting space and event space. The Cambria Desert Ridge groundbreaking follows a wave of groundbreakings and openings in major markets across the country, including a landmark triple groundbreaking that took place last winter in New York in Times Square, Chelsea and White Plains. Two Cambria Suites are now in development in Washington, the D.C. market and a June groundbreaking occurred in the booming Dallas suburb of Plano. Momentum continues with the brand new Cambria Suites scheduled to open next month in Miami's Blue Lagoon business district, which is close to Miami International Airport, to be followed by openings early next year of properties in White Plains, New York and Washington, D.C. Changing gears, I'd like to talk about SkyTouch Technology, a new division of Choice that we launched this year. SkyTouch is focused on developing cutting-edge, cloud-based technology products for the hotel industry. While still relatively new to market, SkyTouch boasts the most widely distributed cloud-based property management system in the lodging industry. SkyTouch Hotel OS, our product for handling reservations, guest stay information, folios and rates, has just announced an alliance with Pegasus Solutions. Pegasus is the single largest processor of electronic hotel transactions, delivering advanced and affordable connectivity and distribution solutions to nearly 100,000 hotels worldwide. Pegasus will provide seamless connections to its RVNG central reservation system. This initiative opens up significant new markets of hotels that SkyTouch can now serve. We already have a number of SkyTouch customers up and running on the system, and we have an ongoing sales funnel that includes leads and dialogue with numerous hotels and hotel chains, representing potentially thousands of properties. We are pleased with SkyTouch's progress so far. We will be sure to keep you updated on our progress with SkyTouch over the next several quarters. Overall, we are very pleased with our third quarter. Let me turn it over to Dave White to share more detail about the financial results. Dave? David L. White: Great. Thanks, Steve. As you read in this morning's press release, we reported diluted earnings per share of $0.70, which exceeded our previously covered outlook for the quarter of $0.04 per share. Compared to our outlook, I want to highlight a few items that impacted our results during the quarter. Approximately half of our earnings per share outperformance or nearly $0.02 per share was attributable to a lower effective tax rate than we had previously expected due to certain discrete tax benefits that we recognized during the quarter. As a result of these items, our effective income tax rate for the quarter was approximately 28% or nearly 150 basis points less than our forecasted rate of 29.5%. On account of these items, we now expect our full year effective tax rate for 2013 to be approximately 28.5%. The remainder of our earnings per share outperformance for the quarter or $0.02 is attributable to better-than-expected operating and EBITDA performance resulting from top line revenue performance and lower SG&A expenses. Our top line revenue performance exceeded expectations, primarily due to stronger-than-expected franchise developer results, which drove a 43% increase in initial franchise and relicensing fees. Our SG&A performance reflects the continuing cost discipline approach and the timing of certain expenses. Domestic royalty revenues for the third quarter increased by 3% to approximately $77 million due to a combination of increases in RevPAR, our system size and the average effective royalty rate. The increase in domestic royalty revenues was in line with our projections. Domestic RevPAR growth for the quarter was 3%, and reflects a 1.9% increase in average daily rates and a 70-basis-point increase in occupancy. As a reminder, our RevPAR results for the third quarter reflect our franchisees' gross room revenue performance for the months of June, July and August. Our fourth quarter RevPAR outlook reflects the actual results we achieved in the month of September, which were slightly negative on account of the timing of the Labor Day holiday compared to the prior year, and the impact of hurricane activity in occupancy rates last year. In addition, our outlook reflects the month-to-date results in October, which have been positive, but grew in a slightly slower rate than expected on account of the impact of the recent government shutdown. We expect the pace of November RevPAR growth to accelerate as the government shutdown effect wanes. However, we continue to monitor the impact that the recent government shutdown and the debt ceiling debate have had on consumer confidence and on overall macroeconomic trends, and whether it will have any meaningful impact on future RevPAR growth for the remainder of 2013 to the first quarter of next year. Continuing the positive trends we saw in our second quarter, the RevPAR performance for our Sleep Inn system and Ascend Hotel Collection continue to generate meaningfully above average RevPAR growth. The Sleep Inn brand RevPAR increased 6% compared to the prior year, reflecting the benefit of our Designed to Dream program, and our Ascend Collection -- Hotel Collection results increased nearly 9%, primarily due to an 8% increase in average daily room rate growth. We are optimistic that the continued growth in the performance of these brands will resonate with hotel owners and developers and support further growth and development of these brands. On the supply front, we achieved domestic franchise system growth of approximately 2% over the past 12 months, highlighted by a 58% growth in our Ascend Hotel Collection. And finally, our average systemwide effective royalty rate for the domestic hotel system increased 1 basis point to 4.3% for the third quarter compared to 4.29% last year. As we mentioned, we experienced strong growth in our initial and relicensing fee revenues, which increased 43% and exceeded our expectations. During the third quarter of 2013, we executed 129 new domestic franchise contracts, representing a 45% improvement over the same period of the prior year. As Steve mentioned, our new conversion domestic franchise agreements increased 54% and are approaching the prerecession levels. And while new construction domestic franchise agreements remain lower than historical prerecession peak levels, we are encouraged that after a small decline in the second quarter of this year, new construction deals increased by 11% during the third quarter and have now increased year-over-year in 8 of the last 9 quarters. We remain optimistic that this overall trend will continue in future periods and, along with the return of conversions deals, will provide a solid foundation for future domestic unit growth. The number of relicensing and renewal contracts executed during the third quarter improved 16% and have increased 29% year-to-date, reflecting the improved hotel transaction environment. For the trailing 12 months, ending September 30, we have executed 283 domestic relicensing and renewal contracts, which represents approximately 5.5% of the domestic system. We are encouraged about the increased pace of relicensing and renewal activities as it has increased from recessionary levels, which ranged between 2% and 3% of system size between 2009 and 2011, but is still below the peak transaction we saw from 2005 to 2007 and between 8% and 10% of our system was relicensing manually. In other words, there is a significant headroom for growth of transaction volume in the relicensing fee stream. And in addition, an accelerating transaction environment is normally a positive catalyst for new franchise contract sales. Turning to the cost side of the business. Our franchising SG&A cost for the third quarter, which exclude incremental spending on our SkyTouch division increased by $1.3 million or 6% compared to the same period last year. Excluding the impact of an increase in variable compensation, expenses related to the company's employee benefit retirement plan, franchising SG&A increased by 4%. The 4% increase reflects our discipline around cost management and is in line with our long-term SG&A growth objectives for the core business. SG&A expenses attributable to our recently announced SkyTouch Technology division totaled $3.2 million during the third quarter of 2013, compared to $700,000 in the prior year period and were slightly lower than our expectations. Turning to our outlook for the remainder of 2013, we currently expect fourth quarter diluted earnings per share to range between $0.44 and $0.46 per share and full year 2013 diluted earnings per share to range between $1.89 and $1.91 per share. This represents an increase from our previous guidance of $1.84 to $1.87. We expect full year 2013 EBITDA to range between $203.5 million and $205.5 million. The figures assume our domestic systemwide RevPAR increase for the fourth quarter is 2% and 3.25% for full year 2013. As I've previously mentioned, we have reduced our full year RevPAR range in our previous guidance, which was for 3.5% to 4.25% growth, primarily due to recent RevPAR performance, which has reflected the impact of the government shutdown on our fourth quarter results. We expect our net domestic unit growth for 2013 to increase by approximately 2% and our effective royalty rate to increase by approximately 1 basis point. We also assume an effective income tax rate of approximately 29% for fourth quarter and 28.5% for full year 2013. All figures assume the existing share count, which was approximately 58.6 million shares as of the close of business yesterday. Our new full year EBITDA guidance reflects our adoption with the top end of our previous RevPAR guidance by 100 basis points and the timing of certain costs that were initially forecast within the third quarter, but now expected to occur in the fourth quarter of this year. So overall, we are very pleased with our results thus far in 2013 and are focusing on executing on the key levers that drive our core franchising business, as well as growing our SkyTouch division. Now let me turn the call back over to Steve. Stephen P. Joyce: Thanks, Dave. So our results this quarter and our results so far this year are strong. Our surge into the upscale segment, impressive development results particularly among are flagship Comfort brand and the Ascend Hotel Collection and our pursuit of new growth strategies like SkyTouch, have us well positioned for the long-term growth. While we may have had some impact as a result of the government shutdown, we are very optimistic about the next several years for this company, as well as 2014 results. So with that, I'd like to open up the call to answer any questions you might have.

[Operator Instructions] And the first question comes from Shaun Kelley of Bank of America. Shaun C. Kelley - BofA Merrill Lynch, Research Division: I wanted to start with SkyTouch, and just see if there was stage where you could give us any sense on what you're seeing on the revenue side of that. I know, clearly, it sounds like the pipeline is continuing to build, and there's a lot of interest in the product. But we're at a stage yet where you're starting to see positive sales and is that something that we can start to break out at all just to get a sense? Stephen P. Joyce: Well, yes. So the results are actually very encouraging in terms of the pipeline building. We've got the first set of customers actually up and operating, which is great. We've got a number of hotels and brands that are -- have expressed significant interest in our various stages of contracting. So in terms of actually breaking out and giving results, I think our plan is to start sharing that sometime kind early to mid-next year, so we can give you an idea of sort of the growth in the revenue side of that business. We're very encouraged by what we've seen so far, and we are up and operating with independent hotels at this point. The reservation system connection is an important part of that sales process. And so as a result, we're very encouraged, and we'll be sharing those results going forward. Shaun C. Kelley - BofA Merrill Lynch, Research Division: Great. And then secondarily on the cost side of that, it sounds like you came in a little bit lighter this quarter, but maybe that's timing. Are you still in line with the $12 million to $14 million expectations? Is that -- and kind of your thoughts on that going into next year? David L. White: Yes, that's right, Shaun. For '13, it was a little bit lighter for the third quarter than we expected. That's been on SkyTouch. But I think the right way to think about it is still the $12 million to $14 million range for this year. I mean, we're still in the process of ironing out the full financial plan for '14 on the cost side and the revenue side, and we typically provide that outlook as part of our normal reports and later in the fourth quarter or beginning part of next year. So we'll come back to that shortly in that time frame. Shaun C. Kelley - BofA Merrill Lynch, Research Division: Fantastic. And then last one would just be on the RevPAR environment. You said that, clearly, September sounds like it was very weak, and then the government shutdown, obviously, derail things. I think we can see that in some of the RevPAR numbers. But I'm curious, as we roll forward to November, we do start to lap at least Hurricane Sandy, and your thoughts on the impact there? Is that tougher comp for you guys because we certainly hear that from some of the hotel operators due to just general displacement on the East Coast? And is that something that you're kind of planning to weigh you down in November as well? Or how do you think about kind of that impact as you forecast to the quarter? David L. White: Yes. So couple of things. So September, as we mentioned in the prepared remarks, was slightly negative. And really, that was, compared to last year, driven by the timing of Labor Day, as well as of the comps related to the hurricane season. So we saw improvement and positive RevPAR growth in October. We believe that was pulled down a bit by the government shutdown impact. And then going forward into November, we're fully expecting despite tougher comps on the hurricane occupancy side of things that we'll be able to for RevPAR to accelerate from October level. I mean, the specifics that are kind of pretty eye-opening around the impact of the government shutdown are pretty interesting. And Steve, I think, do you want to highlight the national park scenarios and [indiscernible]? Stephen P. Joyce: Yes, so just -- we got 615 hotels near national parks. Just to give you an idea of what happened as a result of that shutdown. Yellowstone, those hotels were down 78%, the Assembly was down 51%, the Grand Canyon area was down 18%. And if you just look at the markets particularly around D.C., D.C. was down 11%, Virginia was down 10%, Maryland was down 4%. So it was interesting [indiscernible] last night when somebody asked, "Well was there really any impact?" I started ratling these numbers [indiscernible] "You're kidding me." And it's almost like people thought that was a paperless exercise. When in fact, it had a significant impact on a number of our franchisees and moved our fourth quarter forecast down. It's part of it -- part of it is the hurricane comparison, but I think they moved us probably 25 to 50 bips on the forecast. David L. White: And the positive, I guess, the positive since the government shutdown has ended, we look at the same set of hotels, the 600-or-so hotels that are in close proximity to national parks, we have seen some spring back in terms of the forward bookings there. So we're encouraged that the results will come back after the shutdown ended in the specific markets, but Steve is spot on that we definitely saw an impact in our outlook to the fourth quarter RevPAR results.

The next question comes from Anthony Powell of Barclays. Anthony F. Powell - Barclays Capital, Research Division: Just looking at the RevPAR results, we've bended very well in the quarter, and also your experience with some good momentum around Comfort, are there any other opportunity to your portfolio to kind of redevelop or renew a brand to generate future growth over the next few years? David L. White: Well this, the Comfort Inn -- between Comfort Inn and Sleep, and maybe think about the size of those brands and the contribution to the company's royalty stream. They're obviously very substantial, represent more than half of the royalty stream. So obviously, those are a key focus for us. Frankly, with all of our brands, there's opportunity we believe to continue to devote the -- particularly the marketing reservation resources against the activities that can drive same-store sales. So we're highly focused on things like improving rate and revenue management, pricing optimization, things that will help all of our hotels across the system drive top line revenues on a same-store basis, which should support growth via the new construction or conversion for all of our brands. So I would say, in terms of major brand refresh programs, initially we've been focused on Comfort and Sleep, but we have some element in the brand arena or in all of our brands [indiscernible] making sure they stay relevant with consumers. And then, as I said, we're driving all of our activities and marketing reservations around helping our franchisees be more successful, better operators and better top line revenue managers in a very young complex distribution world. Stephen P. Joyce: And I think the very encouraging thing for us is we went through a very extensive Big Data analysis of the opportunities for our brands, and came away with the sense that there is an extraordinary level of opportunity for all of them. But on a very specific quarter-by-quarter analysis of the country, so we're very optimistic based on that. And then some of the things we don't talk about, for example, in quality, roughly 2 years ago, we moved to bring more consistent in our brands in terms of 5 primary characteristics around the bed to shower, the welcome, some other things. And as a result, you've seen the growth in quality that we've experienced as well. So we are constantly looking at ways to better make our brands attractive to the end consumer, but also with a strong balance towards the franchisee and their profitability. And we've been making great results over the last couple of years and we're going to continue that.

The next question comes from Robin Farley of UBS. Robin M. Farley - UBS Investment Bank, Research Division: Just a quick question. The conversion, obviously, a big increase in the quarter. Should we think about that as being a little bit lumpy because of the timing of some things? Or in other words, is that what we should think of as a run rate in terms of numbers? Or maybe just some lumpiness? Stephen P. Joyce: Well no. We don't look at it lumpy at all. If you look at the applications in-house and sort of the general piece, we would say that sort of indicative of the level of activity that we've got going on, which is why we're so encouraged. And quite frankly, lumpiness occurs at the end of the year, if there is any, because that's when the sales guys try to get it closed and get their deals done in order to get compensated in the year for the year. So that is partly what -- how we expect it as well. And so we've got a strong fourth quarter in terms of development planned. And all indications are it's continuing at a very strong pace, and we're going to do very well compared to last year. And the other encouraging thing that we've mentioned but didn't talk about a lot was new construction activity is finally beginning to swing up, still well below where it was, but we got a lot of interest. We've done 2 recent franchisee events, and almost 2 franchisee, they are talking about starting projects they've been holding off on. So we're very encouraged as well that we're finally starting to see that new construction come around and are hoping that in '14, we got a lot of projects in the grounds starting up. David L. White: And Robin, just to add to Steve's commentary. We're obviously very optimistic about the conversion environment. But just when you think about our fourth quarter, you should factor in last year in the fourth quarter, we executed a transaction with Colony Capital around the Jameson portfolio, where we've picked up about 46 contracts in the fourth quarter last year, which were conversion. So just when you think about that a multi-unit deal, that was in last year's numbers, just to make sure you factor that in when you're dealing with comps.

The next question comes from Nikhil Bhalla of FBR. Nikhil Bhalla - FBR Capital Markets & Co., Research Division: I wanted to just get your sense on 1 to 2 years out, what do you think the SkyTouch does in terms of, like, as a proportion of your overall EBITDA? Would it be 5%, 10%, something more? How should we think about that? Stephen P. Joyce: Well I'm not sure if we want to put a number out. Look at it this way, and this is we've talked about this way before. We have an existing business. It's now roughly $35 million, which is the existing group of franchisees. We believe we can add the opportunity, as we've said, there's thousands of hotels that we can add. And those revenue basis, you could apply a profit level of what you normally see from SaaS-based tech companies, which is what we would be modeling after. And our expectation is it will be a meaningful contribution to EBITDA. We don't believe that the tech side of the business is going to eventually be 50% of our EBITDA. But we also think it's a meaningful addition. And to do that, you got to make an estimate of where you think the number of hotels you're going to sign up. Are you going to sign up 2,000 hotels or 5,000, and depending on how well you do with that will determine what the eventual contribution is. We obviously launched that business because we believe it can be a meaningful contributor to EBITDA. And that's where we are currently. At some point, we'll start trying to give you better guidance about what it will add in -- probably in the year, but we're just not ready to do that because there's so many conversations going on. It's hard to gauge actually how many people will be up. The other thing you need to think about is just because you signed an agreement with a property or a brand, it doesn't mean they come up immediately. It depends on what needs to be done in order to bring them live. In the brand's conversation, for example, a number of things need to be done in terms of connectivity to their other systems. So we will report out on where we're going in terms of those sales as we get a clearer picture of our -- of the pace that we can expect. But the real answer to your question is the contribution will be based on the number of hotels that we eventually sign and bring on in that time frame, and we obviously launched it because we thought it would be a meaningful contributor. Nikhil Bhalla - FBR Capital Markets & Co., Research Division: Got it. Just a follow-up question on -- since you mentioned SaaS. What is the typical margin there? David L. White: Generally, you see it kind of in the mid-30% range, of course, there's the scale and scale being critical. Nikhil Bhalla - FBR Capital Markets & Co., Research Division: Got it. And just one last question on SkyTouch. Steve, are you in a position to share any set of economics on what it would cost, like, independent hotel to sign up with it with a system? What a typical contract may look like? Will it be a year or 2 years or something longer? Any ongoing fees or anything that they'll be paying you? Stephen P. Joyce: They are typically shorter-term agreements. So a year -- you should think in terms of a year. They are -- in terms of the actual customer coming on and the price they're paying, it's obviously market-based, but you should think about it this way. The SaaS-based environment is a dramatically different environment than a server-based environment. So the cost structure shifts significantly. So the property no longer has to buy a server and cabling and air conditioning for the server and somebody to look at the server. All of that goes away. So there's a significant cost savings, and the pricing of it will be based on sort of the market for those types of services and there's other companies out there. But the game changer in this environment is you get away from significant cost on property to a monthly fee, which will not only be profitable to us, but will be in almost every case we've seen a significant cost savings with people coming on.

The next question comes from David Loeb of Baird. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: I wanted to just ask about Cambria. It looks like you're ramping up the development. If I'm reading the numbers right, it looks like you added 2 to the pipeline in the third quarter, and 1 left the pipeline because it opened. And clearly, there've been a couple of exits in recent -- looks like one in this quarter. Can you just talk about where you are in that cycle or are you about done with the exits, and do you expect to be adding more to the pipeline and when did the pace of opening start accelerating? David L. White: Yes, a few things. I mean, we most certainly expect the pace of development to accelerate, and that the size of the system to accelerate. I think we're really excited about, and I think Steve mentioned a few of them earlier about the projects that are set to open in the very near term, the hotel that opens in next spring, in the D.C. market near the convention center. We have a Cambria Suites here in Rockville, Maryland and obviously, White Plains, New York. That project is slated to open in, I think, February of next year. And then we've got New York City Times Square and a JV that's with a great partner, as are the others, which is under development, and then the Chelsea Hotel is going to open sometime in the first quarter, and Miami Airport is the last. And so we're very excited about the hotels that are be coming online in the near term. There's also a number of deals that have executed or nearing execution for groundbreakings, and we talked about Desert Ridge Plano, Texas. So we're very excited about where we're able to keep projects done. And I think you'll see that reflected in both the system size for Cambria Suites and in the deal flow. Stephen P. Joyce: But in terms of gross numbers, what we're expecting is probably somewhere near 30, either open or under construction through the end of the year. And then with another 6 to 9 months based on the pipeline we're looking at, we are reasonably expecting to see hopefully something on the order of 30 hotels under construction. So that will give you an idea of the size we expect to add. David L. White: Yes, the important thing on these big hotels that are coming online in the very near term as well and Steve talked about this before, we do have a significant amount of unmet room demand in these types of markets and these urban markets. So we're excited that we're going to be able to demonstrate that to these hotel projects in the very near course. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: So the exits are about done? David L. White: The exits are always tough to predict particularly on a small system. The size, that's only 19 hotels at this point. But from here, we're expecting generally a positive momentum going forward. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: Okay. And one just kind of bookkeeping question. Exhibit 6, is that new signings or is there anywhere we can actually see openings or additions to the system? David L. White: Yes, that is new franchise contract signings on Exhibit 6. In terms of the gross openings and gross terminations, we put that in our 10-K, so you could see that by brand in our 10-K. And then that's primarily where you can pick that up.

The next question comes from Steven Kent of Goldman Sachs. Steven E. Kent - Goldman Sachs Group Inc., Research Division: Just a couple of questions on your RevPAR growth, some people have asked and you did go through the detailed impact of the government shutdown to your results. But even relative to Smith Travel, it looks like you're coming in a little bit lower. Is that because you over-index in some of those markets? And that's also what's affecting your fourth quarter outlook? And then just I think you mentioned this in the earlier discussion on SkyTouch, you have an agreement Pegasus. How many hotels use the Pegasus system? What kind of opportunities are there for a tie-up with them? Stephen P. Joyce: Okay. So -- and I'll let Dave give you a little more detail. We are -- you're right in terms of the analysis versus the start date. It is a result of locations. Where we are, highway-wise, park-wise, if you look at where the growth of the industry occurred, it tends to be more urban and more larger cities, and we are well distributed in smaller cities and, as we discussed, looking to be better distributed in more urban markets. So that's where we're working towards. And then Pegasus, the numbers is roughly 100,000 hotels that are involved with them. So we think that's a major milestone in terms of the customer base that we're able to go after and try to sign. David L. White: I can't really add much to what Steve said on the RevPAR data. I mean, it's pretty straightforward and standard that our RevPAR index has historically indexed, slightly below the Smith Travel Research results at this point in the cycle. So we're not seeing anything there in terms of indexing in spite that, that's very different from past cycles and similar spots.

The next question comes from Thomas Allen of Morgan Stanley. Thomas Allen - Morgan Stanley, Research Division: So I read in the press recently that you were talking about potentially making an acquisition of another brand or lodging company. Can you elaborate that? And how should we think about it in the context of your existing capital structure? Stephen P. Joyce: First, you should never believe what you read. Two, we don't comment on that. We don't comment on any activity that may be occurring. Thomas Allen - Morgan Stanley, Research Division: Okay, Then, I guess, the second part of the question, I mean, can you give us an update on your potential capital returns? You obviously did the big onetime dividend last year. How should we think about uses of cash going forward? Stephen P. Joyce: Well, as you know, we are a very shareholder-friendly company. And so our #1 priority is and always has been and always will be return the value to shareholders. We are -- if you look at the company's results over the years, we're in some pretty unique -- in a pretty unique space in terms of other companies in the relative returns that we've provided. So we are, however, an opportunistic company looking at the environment and always looking at how best to position the company from a capital standpoint and how best to figure out how to return value to shareholders. And so you will continue to see from us a dividend policy, which is strong, but you'll also see from us the opportunity to return value. So we're are not writing off another dividend. It could happen if we thought the timing was correct. We also are an active share repurchaser. We believe that's the appropriate strategy. And then, as we've talked about, we're also investing some of those dollars in the growth of the business. So our strategy, which is very iterative and we're constantly evolving it, we do it year-by-year, but we also evolve it based from what we're seeing is based on the opportunities that are available to us, with though the mindset that return of capital to shareholders is our primary focus. Thomas Allen - Morgan Stanley, Research Division: Okay. And then final question. So I know you have a short booking window, and you mentioned earlier that you're still formalizing your 2014 plan. But can you talk at all about your thoughts for 2014 RevPAR growth, kind of what would be the puts and takes for growth to be higher or lower than 2013? Stephen P. Joyce: Well, yes. So I guess, the encouraging thing is everyone is forecasting '14 to be up. So -- and they've got a stronger GDP growth. So from our perspective, what we've seen in the forecasting is positive and will be better than '13. They have come down from where they were initially as the fourth quarter for '13 weaken. So -- but we are still expecting a positive year next year based on the forecast we're seeing, and we will give our guidance based on that. The other part though that we continue to hope for is, while all forecast that we're looking at, '14 should be a very positive year for the industry and for our company. However, if we get any cooperation at all from the economy and get more of a boost in terms of jobs, then that would clearly increase that level of RevPAR growth and profitability for the company. And in our case, we are very sensitive to employment. While the employment figures have improved, everybody knows there's a huge number out there that's not. A number of those folks that are employed use our hotels. If they actually get back to employment, we normally see an exaggerated effect from those hires. But if you look at the last jobs report, clearly, we're not getting there yet. If we get some help from that, which then would feed into the GDP growth, then we have an even more positive year. We're going to have a positive year and a better year than 2013 by most analyst reports regardless of where GDP goes. But if we get some cooperation on that in the jobs front, it could be a really good year.

There are no more questions at this time. So I would now like to hand the call back over to Steve Joyce for closing remarks. Stephen P. Joyce: Well thank you for your time and attention. As we mentioned, we are very encouraged by the development results. We are very happy the government is back to work and that, that impact will filter out of our RevPAR results, and we're looking for a strong 2014. Have a great day, and we look forward to talking to you about the fourth quarter.

Thank you, all, for your participation in today's conference. This concludes the presentation, and you may now disconnect. Good day.